Friday, April 01, 2005

Microsoft Facing a Classic Innovator's Dilemma

.NET bloggers are upset over the recently announced pricing scheme for Visual Studio .NET 2005. What the heck is Microsoft thinking? Well, it's called an Innovator's Dilemma. Basically, Microsoft is being forced up-market by cheaper and simpler open source tools. And when the JetBrains .NET IDE arrives on the scene, adding usability and intelligence to the equation, well... I'll let you draw your own conclusions.

An Innovator's Dilemma is when a company (or innovator) follows good, rational, sensible management and marketing strategies and still ends up failing, despite doing everything right. The term was coined by Clayton Christensen in his book The Innovator's Dilemma. Christensen establishes a six step process by which established companies are forced to move up-market:

Step 1: Disruptive technologies are first developed within established firmsStep 2: Marketing personnel seek reactions from their lead customersStep 3: Established firms step up the pace of sustaining technological developmentStep 4: New companies are formed, and markets for disruptive technologies are found by trial and errorStep 5: The entrants move up-marketStep 6: Established firms belatedly jump on the bandwagon to defend their customer base

There's an implied, unmentioned seventh step which I'll spell out for you.

Step 7: Too late. Too bad, so sad. Bye bye. ;-)

Do you remember a time when Visual Studio was the best IDE on the planet? I do. Then a little thing called IntelliJ IDEA came on the Java scene and took that honor. How did Microsoft respond? I'll invent a little scenario that probably isn't far from the truth:

MS Techie: "Our next Visual Studio should have all those cool features IntelliJ IDEA has."MS Marketer: "Okay, let me ask our big customers what they want."Big Company: "Well, VS already has add-ins like ReSharper for those cool features, and there's lots of open source tools for things like automated testing and builds. What we really want is support for our huge teams of Architects, Developers, and Testers."MS Marketer: "Okay, let's push the envelope there and come up with a great product for big teams. We'll call it ... Team System! And since big companies are willing to pay big bucks, lets price it around $10,000 per year! I can just see the money rolling in."

That's about where Microsoft is right now, and that represents Steps 1 through 3. Step 4 is already happening as JetBrains improves on ReSharper 1.5 with the upcoming ReSharper 2.0. Step 5 is just around the corner, when JetBrains will follow up ReSharper 2.0 with their .NET IDE (tentatively named ReSharper IDE). Step 6 occurs when MS realizes that the .NET IDE is gobbling up all their customers. But by then it will be too late (Step 7).

Plug: ReSharper 2.0 will be released shortly after VS.NET 2005, with tons of new features, but you can start enjoying the pleasures of ReSharper 1.5 today, and the upgrade to 2.0 is free, so there's no need to wait. Get it now while it's still only $99 ($149 starting April 5th).

Once you ship your own .NET IDE what will your committment be to evolving ReSharper further?

Will your ReSharper product lag behind your .NET IDE in terms of the "common" functionality between the two products (e.g. a particular refactoring will be appear in the IDE before it does in ReSharper if it ever does appear in ReSharper)?

So long as JetBrains works on the plugin version of ReSharper, it will have (as technically possible) comparative features ... obviously, the IDE will perform better, as it will be more tightly integrated; however, having said that ReSharper 2.0 is simply being broken "off" into the IDE -- which means you take all of those cool ReSharper 2.0 features, and add them into a full scale IDE with a similar look/feel as IntelliJ IDEA ... but for support for C#, VB.NET, and ASP.NET ...

As for cost ... there will *probably* be a discount for ReSharper plugin users who want to jump to the IDE ... there will be if I have the final say, but this can depend on its introductory price and the IDE is too far down the road today for me to give a concrete statement ... but, hang in there and keep asking. ;-)

The EAP for the .NET IDE won't start until AFTER ReSharper 2.0 for VS .NET 2005 is launched (probably Nov/Dec. 2005) ... with final release first quarter next year ... but, could be sooner, could be later ... hang out in our newsgroups for the latest updates:

There's the target market to consider.In the enterprise (and by that I mean the multinational, the large accounts) there's (still?) the trend to buy the most expensive tool on the market because in their eyes "expensive equals high quality".I've seen this in action at more than one customer. In one extreme case the corporate purchase quality came down to a 2 step selection process:step 1: does IBM sell something that serves our needs. If so, buy IBM.step 2: if IBM doesn't sell it, buy the most expensive alternative on the market.

True, there are many companies that make purchasing decisions that way. I would consider those the late majority and late adopters (aka laggards). They only buy the new tech when it is fully mainstream and they have no options remaining but to switch. They are certainly not going to buy a ReSharper IDE until it's already the most popular choice. My response is, we'll cross that bridge when we come to it.

Such late adopters do eventually switch, as we've seen with desktop computers, the Internet, and any other now-mainstream technology. The Innovator's Dilemma occurs much earlier in the technology adoption lifecycle.

'bigger companies have more people, so they make better products and give better support'

Again, these would definitely be characterized by the Late Majority (aka Conservatives) of the technology adoption life-cycle.

Your example of Delphi vs. VB is a good example of Crossing the Chasm (where the Gorilla gets the biggest market share, even if it's not the best product), but it's not a good example of the Innovator's Dilemma. Delphi is not a disruptive innovation compared to VB, so you would not expect it to kill VB, even if it is technically better. However, the ReSharper IDE will be a disruptive innovation compared to VS.NET, just as IntelliJ IDEA was disruptive to JBuilder.

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